GM (GM) Gets Hummer Purchase Interest From Middle East

GM (GM) may be able to add humiliation to the list of losses and indignities it has had to suffer over the last year as a recession and rising fuel prices have ruined its earnings and taken it to the brink of insolvency.

As part of a money-saving restructuring, the one brand that GM has expressed significant interest in selling is Hummer, the maker of massive SUVs and pick-ups which probably only average five miles to the gallon of gas.

Perhaps it should not be a surprise that one of the first indications of interest in Hummer has come from the Middle East where gas costs about as much as water and investment firms are bloated with profits from high oil prices.

According to Reuters, "GM has received interest from two separate investors from the Gulf Arab region to buy its Hummer brand, the company’s Middle East chief told Reuters on Tuesday."

Since GM needs the money, a dollar is a dollar no matter who is paying it. Arab investors understand that large SUVs still sell well in China, parts of Latin America, and the Middle East. Gas prices are not high everywhere.

GM may not lose massive sums on Hummer. The brand does not sell that many vehicles. But, it is an embarrassing symbol for a car company which would like to be viewed as a champion of fuel-efficient cars and one with a new focus on vehicles that will run on natural gas and electricity. At this point those perceptions are completely untrue and Hummer helps undermine the PR effort to advance a change GM’s image

GM can stand the irony of selling Hummer to interests in the Middle East, the oil-rich region which has helped drive it into the red, as long as it can rid itself of the dead weight of the Hummer image.

Douglas A. McIntyre